Severance pay is crucial, but there are other benefits and resources to offer
While severance pay is usually a lump sum payment to cover the employee’s salary for a certain period of time, a severance package can include other forms of compensation and benefits, such as the continuation of insurance benefits, bonuses, commissions, pension contributions and even assistance in finding a new job.
For example, when San Francisco-based Twilio laid off 11% of its workforce in September, all impacted employees were to receive at least 12 weeks of pay, plus one week for every year of service at Twilio. They’ll also receive the full value of Twilio’s next stock vest. For employees relying upon company-sponsored visas, they’ll receive even more support to “hopefully minimize the disruption” as they work through their immigration status.
Along the same lines, fellow San Francisco-based tech firm Patreon laid off 17% of its workforce. As a result, the company has given laid off employees in the U.S. three months’ severance, plus an additional two weeks for each half year of tenure beyond the first year. They’ll also receive COBRA health care coverage through the end of the year. Because of differing laws by region, European employees will receive various packages based on where they live.
Regardless of location, all laid off employees will be eligible for three months of mental health benefits through Spring Health. Those enrolled in Patreon’s financial counseling services through Origin will have an additional three months of continued coverage, too. The company has also contracted with outplacement services to provide employees with curated job matching, resume writing and cover letter writing services “for as long as it takes you to find your next job.”
Patreon is also waiving the one-year equity vesting cliff for all departing employees so that everyone has an opportunity to be a shareholder. Those with stock options will vest through October 15, 2022, and those with RSUs will vest through the next vesting date of November 20, 2022. All laid off employees will qualify for an extended option exercise period of five years, and the company has extended it to seven years in regions where it’s legally able.
For more frequently asked questions about severance pay, click here.
